This invention relates generally to a method and system for facilitating the identification, investigation, assessment and management of legal, regulatory, financial and reputational risks (“Risks”). In particular, the present invention relates to a computerized system and method for banks and non-bank financial institutions to access biometric profiles compiled on a worldwide basis and relate such profiles to other information gathered and a risk subject, such as a transaction, wherein the information is conducive to quantifying and managing financial, legal, regulatory and reputational Risk associated with the transaction.
An increased awareness of fraud, money laundering and terrorism activities has prompted numerous security provisions to be implemented relating to transactions and in particular financial transactions. One area of security relating to an event, including a financial transaction, includes recording an image of a participant to the event. Such an event can include something as simple as gaining access to a building or executing a simple banking transaction.
Typically, a recorded image is utilized to memorialize an event or transaction or to perform a visual correlation between a proffered photo ID and a person offering the photo ID. These measures are good unto themselves, but offer little prophylactic protection. An individual's identity can be verified by digitally measuring selected features of the individual and comparing these features against the previously stored biological measurements can be utilized to ascertain an individuals identity.
Additional security measures can be linked to network access or general security and Risk management. Such security measures can include biometrics. One area of security relating to an event, including a financial transaction, includes recording an image or other biometrics of a participant to the event. Such an event can include something as simple as gaining access to a building or executing a simple banking transaction.
Typically, a recorded image is utilized to memorialize an event or transaction or to perform a visual correlation between a proffered photo ID and a person offering the photo ID. These measures are good unto themselves, but offer little prophylactic protection.
As money-laundering and related concerns have become increasingly important public policy concerns, regulators have attempted to address these issues by imposing increasing formal and informal obligations upon financial institutions. Government regulations authorize a broad regime of record-keeping and regulatory reporting obligations on covered financial institutions as a tool for the federal government to use to fight drug trafficking, money laundering, and other crimes. The regulations may require financial institutions to file currency and monetary instrument reports and to maintain certain records for possible use in tax, criminal and regulatory proceedings. Such a body of regulation is designed chiefly to assist law enforcement authorities in detecting when criminals are using banks and other financial institutions as intermediaries for, or to hide the transfer of funds derived from, criminal activity.
Obligations include those imposed by the Department of the Treasury and the federal banking regulators which adopted suspicious activity report (“SAR”) regulations. SAR regulations require that financial institutions file SARs whenever an institution detects a known or suspected violation of federal law, or a suspicious transaction related to a money laundering activity or a violation of the Bank Secrecy Act (BSA).
Regulations can impose a variety of reporting obligations on financial institutions. Perhaps most broadly relevant for the present invention, regulations require an institution to report transactions aggregating to $5,000 that involve potential money laundering or violations if the institution, knows, suspects, or has reason to suspect that the transaction involves funds from illegal activities, is designed to disguise such funds, has no business or legitimate purpose, or is simply not the sort of transaction in which the particular customer would normally be expected to engage, and the institution knows of no reasonable explanation for the transaction after examining the available facts.
For example, banks must retain a copy of all SARs and all supporting documentation or equivalent business records for five (5) years from the date of the filing of the SAR. Federal banking regulators are responsible for determining financial institutions' compliance with the BSA and implementing regulations.
Federal regulators have made clear that the practical effect of these requirements is that financial institutions are subject to significant obligations to “know” their customer and to engage in adequate monitoring of transactions.
Risk associated with an account involved in international transactions can be greatly increased due to the difficulty in gathering and accessing pertinent data on a basis timely to managing Risk associated with the transaction. As part of due diligence associated with performing a Financial Transaction, it is imperative for a financial institution to “Know Their Customer” including whether a customer is contained on a list of restricted entities published by the Office of Foreign Access Control (OFAC), the Treasury Office or other government or industry organization. In addition, it is important to know that the person presenting themselves as a customer is in fact the customer and not an imposter.
System and methods previously disclosed offer assistance in ascertaining whether a name of a customer is associated with information that may be indicative of high Risk; however there is no method or system to tie such information to association with physical or biometric profiles. What is needed is a method and system to address Risk containment prophylactically through the use of biometric data.